ELGIEQUIP - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.9

🛠️ Fundamental Analysis: Elgi Equipments Ltd. (ELGIEQUIP)

Elgi Equipments is a leading manufacturer of air compressors and related industrial equipment, with a growing global footprint. While its operational metrics are strong, the valuation is stretched, and the PEG ratio suggests limited upside unless earnings growth accelerates further.

Metric Value Implication

P/E Ratio 51.1 Overvalued vs. industry PE of 41.8

PEG Ratio 1.88 High — growth is priced in

ROCE / ROE 21.9% / 20.1% Strong — efficient capital deployment

Dividend Yield 0.39% Modest — not a major income play

Debt-to-Equity 0.31 Reasonable — manageable leverage

EPS ₹11.0 Decent earnings base

Qtr Profit Var +33.8% Strong growth momentum

FII/DII Holding Change -1.47% / +0.25% FII trimming — valuation concerns; DII mildly positive

📉 Technical Analysis

Current Price: ₹563

DMA 50 / DMA 200: ₹534 / ₹539 → Neutral trend; consolidation phase

RSI: 55.5 → Neutral zone — no strong momentum

MACD: +11.1 → Mild bullish signal

Volume: Well below average — waning interest

💰 Ideal Entry Price Zone

₹510–₹540

This range aligns with DMA support and offers a better valuation entry

Avoid fresh entry above ₹580 unless earnings surprise or volume picks up

📈 Long-Term Investment Outlook

Strengths

ROCE and ROE above 20% — strong operational efficiency

Consistent profit growth — solid execution

Diversified industrial exposure — global expansion potential

Reasonable debt — financial flexibility

Risks

PEG > 1.5 — valuation is rich relative to growth

FII selling — possibly due to stretched valuation

EPS still modest — needs scaling for long-term compounding

Volume weakness — lack of strong buying conviction

Elgi Equipments is a quality mid-cap industrial play with strong fundamentals but limited valuation comfort. Suitable for long-term investors who believe in India's industrial and export growth story, but entry should be timed carefully.

🏁 Exit Strategy / Holding Period

If you already hold ELGIEQUIP

Holding Period: 2–4 years to benefit from industrial capex and global expansion

Exit Strategy

Consider partial profit booking near ₹720–₹750 (recent high)

Reassess if ROCE drops below 15% or PEG rises above 2.5

Hold if earnings growth sustains and valuation moderates over time

Would you like a comparison with other industrial equipment players like Ingersoll Rand, Kirloskar Pneumatic, or Thermax to explore alternatives with better valuation comfort?

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